The Toronto Central Ontario Building and Construction Trades Council v. Norfinch Developments Limited, 1982 CanLII 837

Ontario Labour Relations Board

[1982] OLRB Rep. February 241

1250-81-R; 1251-81-R The Toronto Central Ontario Building and Construction Trades Council on its own behalf and on behalf of its affiliates, Applicant, v. Norfinch Developments Limited, Norfinch Investments (Canada) Limited, Norfinch Construction (Trans-Canada) Limited, Norfinch Construction (Toronto) Limited, Norfinch Construction (Canada) Limited, Samteit Investments Limited, Samteit Developments Inc., Samteit Corporation, Respondents.

BEFORE: Pamela C. Picher, Vice-Chairman and Board Members W. H. Wightman and S. Cooke.

APPEARANCES: Alexander J. Ahee, David Johnson and Michael Lloyd for the applicant; Gerald Levitan for Norfinch Developments Limited, Samteit Investments Limited, Samteit Developments Inc. and Samteit Corporation; A. Ziering for Norfinch Investments (Canada) Limited, Norfinch Construction (Trans-Canada) Limited, Norfinch Construction (Toronto) Limited and Norfinch Construction (Canada) Limited.

DECISION OF THE BOARD; February 18, 1982

Decision

1. The applicant has applied to the Board pursuant to sections 1(4) and 63 of the Labour Relations Act. The applicant Council maintains pursuant to section 1(4) of the Act that the group of companies including Norfinch Developments Limited, Samteit Investments Limited, Samteit Developments Inc. and Samteit Corporation carry on associated or related activities or businesses and are under common control or direction. The Council Seeks a declaration that these companies are one employer for the purposes of the Act in order to establish that the Samteit group of companies is bound by a collective agreement between the Council and Norfinch Developments Limited dated June 20, 1973. Section 1(4) of the Act provides as follows:

Where in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions concerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declaration or otherwise, as it may deem appropriate.

2. The applicant Council further seeks a finding under section 63 of the Act that a sale of a business has taken place between Norfinch Developments Limited (the signatory to the working Agreement with the Council) as the predecessor employer and Norfinch Construction (Toronto) Limited as the successor employer. The relevant portion of section 63 of the Act is set out below:

63.1(1) In this section,

(a) "business" includes a part or parts thereof;

(b) "sells" includes leases, transfers and other manner of dis­position, and "sold" and "sale" have corresponding meanings.

(2) Where an employer who is bound by or is a party to a collective agreement with a trade union or council of trade unions sells his business, the person to whom the business has been sold, is until the Board otherwise declares, bound by the collective agreement as if he had been a party thereto and, where an employer sells his business while an application for certification or termination of bargaining rights to which he is a party is before the Board, the person to whom the business has been sold is, until the Board otherwise declares, the employer for the purpose of the application as if he were named as the employer in the application.

In the event the Board concludes that the above mentioned sale of a business has taken place counsel for the union then seeks a declaration under section 1(4) of the Act that Norfinch Construction (Toronto) Limited, Norfinch Investments (Canada) Limited, Norfinch Construction (Trans-Canada) Limited, and Norfinch Construction (Canada) Limited carry on associated or related activities or business under common control or direction and are one employer for the purposes of the Act. For clarity we note that at the hearing counsel for the applicant Council stated that his application under section 1(4) of the Act does not extend to seeking a declaration as between Norfinch Developments Limited and Norfinch Construction (Toronto) Limited where there has been no common control or direction for 5 years. For a connection between these companies he relies on section 63 of the Act and maintains that a sale of a business has taken place from Norfinch Developments Limited to Norfinch Construction (Toronto) Limited.

3. The relationship between the various corporations involved in this matter is somewhat complicated. A basic outline of the situation is contained in an agreed statement of facts set out below:

Agreed Facts

(a) Norfinch Developments Limited was formed by Mr. Sam Teitel­baum in 1969.

(b) The corporation's objects were to allow it, among other things, to work in all aspects of the construction industry.

(c) In or about 1970 Mr. Arie Ziering came into the company and became an equal shareholder with Mr. Sam Teitelbaum.

(d) On June 20, 1973 Norfinch Developments Limited entered into the working Agreement with the Toronto Central Ontario Building and Construction Trades Council.

(e) After that date Norfinch Developments Limited engaged in various construction projects on which it honoured the Working Agree­ment.

(f) In approximately 1976 a split between the partners (Mr. Teitelbaum and Mr. Ziering) occurred. As a result of the break-up agreement the name of Norfinch Developments Limited was changed to Samteit Developments Inc. on January 29, 1976. At that point, with the change of name, Norf inch Developments Limited cease to exist and Samteit Developments Inc. was formed.

(g) On May 1, 1979 and amalgamation occurred between Samteit Developments Inc. and Samteit Investments Limited.

(h) Samteit Developments Inc. and Samteit Investments Limited both have objects which give them the power or authority to carry on business as builders or contractors for the purpose of doing any facet of construction work.

(i) In the amalgamation agreement between the Samteit companies it was agreed that they would be subject to all of the liabilities, contracts, disabilities and debts of Norfinch Development Limited.

(j) On June 23, 1980 Samteit Corporation was formed. It is a holding company for trust beneficiaries. Prior to his death Mr. Teitelbaum held 100 per cent of the shares of this company. The object of Samteit Corporation was to purchase and deal in land. The objects of Samteit Corporation are broad enough to include construction in the future.

(k) Samteit Corporation is allowed to carry on business as Samteit Investments Limited and Samteit Developments Inc.

(1) The head offices of all the Samteit companies is at 98 Norfinch Drive in Downsview, Ontario.

(in) Up until June of 1981, Mr. Teitelbaum was the controlling mind of all the Samteit companies. In July of 1981 Mr. Teitelbaum died. At present the Samteit group is in the hands of executors.

(n) The Norfinch group of companies, apart from Norfinch Development Limited, is active in construction.

4. Initially a group of companies was owned and operated by both Mr. Ziering and Mr. Teitelbaum. On June 20, 1973 one of those companies, Norfinch Development Limited, entered into the Working Agreement with the Council, following which it engaged in certain construction projects in compliance with the collective agreement. In 1976, however, the two partners split. At the time of the split Mr. Ziering and Mr. Teitelbaum were both shareholders of Norfinch Developments Limited. As well they were the original shareholders of the other Norfinch companies: Norfinch Investments (Canada) Limited, Norfinch Construction (Trans-Canada) Limited, Norfinch Construction (Toronto) Limited and Norfinch Construction (Canada) Limited. The basic structure of the break-up agreement was for Mr. Ziering to purchase Mr. Teitelbaum's interest in the Norfinch companeis (apart from Norfinch Developments Limited). Mr. Teitelbaum sold his interest in all of Norfinch companies except Norfinch Developments and purchased Mr. Ziering's shares in Norfinch Developments Limited. Mr. Ziering stated that he bought Mr. Teitelbaum's share in Norfinch Construction (Toronto) Limited. Teitelbaum had been the president holding a 20 per cent share and Ziering had been the secretary-treasurer. Mr. Ziering is now the president of all four Norfinch companies.

5. Mr. Teitelbaum purchased Mr. Ziering's interest in Norfinch Development Limited. According to Mr. Ziering, Mr. Teitelbaum purchased the assets of Norfinch Developments Limited. We conclude on the evidence that this occurred through Teitelbaum's purchase of Mr. Ziering's shares in Norfinch Developments Limited. Mr. Ziering testified that the assets owned by Norfinch Developments were pieces of property in the nature of industrial plazas located at 98 Norfinch Drive, 100 Norfinch Drive and 100 Norfinch Drive as well as some land. He stated that when the split occurred in 1976 between himself and Mr. Teitelbaum, Norfinch Developments Limited was not doing much and was in fact acting like a holding company. He noted that Norfinch Developments Limited started winding down in 1974 or 1975.

6. As part of the break-up agreement Mr. Teitelbaum was precluded from operating a company with the name "Norfinch" in it. Accordingly the name "Norfinch Developments Limited" was immediately changed to "Samteit Developments Inc." which subsequently amalgamated with Samteit Investments Limited. From the point of the break-up to the present time the Samteit companies have not been involved in construction. Their corporate objects, though, are broad enough to enable the companies to engage in all aspects of construction work. At the time of this application Samteit Investments had one bookkeeper and an office clerk.

7. According to Mr. Ziering the only Norfinch company which is active today is Norfinch Construction (Toronto) Limited. Norfinch Construction (Canada) Limited is a holding company which holds the shares of Norfinch Construction (Toronto) Limited. Ziering further commmented that this company never did build anything. Similarly Norfinch (Trans-Canada) Limited is also a holding company. It has never engaged in building and, according to Mr. Ziering, is presently winding down. With respect to Norfinch Investments (Canada) Limited Mr. Ziering stated that it is not now and never has been engaged in construction. Instead it is involved in importing goods from Germany. All of these Norfinch companies have their head office at 3070 Ellesmere Road.

8. Mr. Ziering stated that Norfinch Construction (Toronto) Limited, formed in approximately 1971, engages in construction for its own portfolio. He maintains that his company is not bound by the Working Agreement between Norfinch Developments Limited and Council. He maintains and the Board accepts that it, not Norfinch Developments Limited, built the shopping centre at Jane and Finch which was in progress in 1973 when theWorking Agreement was signed. Mr. Ziering stated that when he signed the collective agreement it was his intention that it would only apply to Norfinch Development Limited and not Norfinch Construction (Toronto) Limited.

9. An Addendum to the Working Agreement dated June 20, 1973 was submitted into evidence. The Addendum dated July 11, 1973 is initialed by Mr. Ziering and reads as follows:

ADDENDUM TO AGREEMENT

Between

Norfinch Developments Limited

and the

Toronto Building & Construction Trades Council

"The Council" agrees that all contracts let shall be completed without hindrance from the Council or its affiliated Unions as of July, 11th, 1973 (see attached list).

"The Company" agrees that all contracts for work not tendered as of July 11th, 1973 shall be awarded to Contractors in contractual relation­ship with Unions affiliated with "The Council".

Norfinch Developments Limited and Toronto Building & Construc­tion Trades Council hereby agree that 'lobs" more particularly specified in Schedule "A" attached hereto shall not require Norfinch Developments Limited to award contracts to contractors in contractual relationship with Unions affiliated with "The Council".

Date: July 11, 1973

Attached to the Addendum on the letterhead of Norfinch Developments Limited are the names of two projects with a listing of their respective contractors. One such project is designated as "NOR FINCH SHOPPING CENTRE — Jane & Finch". Mr. Ziering testified that he has never seen the schedule that is presently attached to the Addendum. It does not bear his initials. The second designated project was 98 Norfinch Drive which without dispute was done by Norfinch Developments Limited. The Board cannot conclude on the basis of this evidence that Norfinch Construction (Toronto) Limited either became bound by the Working Agreement or is now estopped from claiming that it is not bound by the agreement as suggested by counsel for the union.

10. Mr. Michael Lloyd is a business representative of the Council. He is responsible for organizing general contractors and policing and enforcing the working agreements. During the second week of August of 1981 Mr. Lloyd received a call from an affiliated union informing him that he was on a job of Norfinch Construction and that they were using non­union people. With further investigation it became clear that the job was being done by Norfinch Construction (Toronto) Limited. The instant applications were filed forthwith.

11. Mr. David Johnston, the business manager and financial secretary of the Council, stated t~hat the Council updates its list of companies with whom it has collective agreements every eighteen months. In 1980 they carried out a particularly thorough investigation through the use of students. Students were instructed to inquire into the name, phone number and, where necessary, the principals of the companies. The address they had for Norfinch Develop­ments Limited was 3070 Ellesmere Road which is different than the address on the Working Agreement. Apparently, no one on behalf of the Council made sufficient inquiries to realize that Norfinch Developments Limited had become a Samteit company and was entirely segregated from the present Norfinch companies.

12. Counsel for the Council maintains that a sale of a business within the meaning of section 63 of the Act has taken place between Norfinch Developments Limited as the predecessor employer and Norfinch Construction (Toronto) Limited as the successor. On this basis he argues that Norfinch Construction (Toronto) Limited is bound by the collective agreement, still in effect, which was originally entered into between Norfinch Developments Limited and the Council. If the Board concludes that a sale has taken place he then seeks a section 1(4) declaration as between the present Norfinch companies. Counsel further seeks a declaration that Norfinch Developments Limited, Samteit Developments Inc. (the company which developed from Norfinch Developments Limited), Samteit Investments Limited (the company which amalgamated with Samteit Developments Inc.) and Samteit Corporation are one employer for the purposes of the Act.

13. The Board cannot conclude on the evidence that a sale of a business within the meaning of section 63 of the Act took place between Norfinch Developments Limited as the predecessor employer and any of the other Norfinch companies, including Norfinch Construction (Toronto) Limited. Mr. Ziering testified without contradiction that at the time of the break-up of the relationship between Mr. Teitelbaum and Mr. Ziering Norfinch Developments Limited was not doing construction work and was instead acting like a holding company. Mr. Ziering, the president of Norfinch Construction (Toronto) Limited, the company still active in construction, did not as part of the break-up agreement purchase any part of Norfinch Developments Limited, the party to the collective agreement in issue. Instead Mr. Teitelbaum bought Mr. Ziering's shares in Norfinch Developments Limited. There is no "business" that was being carried on by Norfinch Development Limited which, through the break-up agreement, was passed to Mr. Ziering or his Norfinch companies. Mr. Ziering simply sold his interest in Norfinch Development to Mr. Teitelbaum. Everything that was owned by Norfinch Development at the time of the break up stayed with Norfinch Development. The only thing that changed through the transaction was the ownership of the shares within the company, Mr. Ziering disposing of his shares to Mr. Teitelbaum. Accordingly, no part of Norfinch Developments Limited was transferred to Mr. Ziering or any of the other Norfinch companies. In the absence of such a transfer the Board cannot conclude that a sale of a business between Norfinch Development Limited as the vendor and Norfinch Construction (Toronto) Limited or any of the other Norfinch companies as the purchaser has taken place.

14. We turn to the application under section 1(4) of the Act. Samteit Investments Limited amalgamated with Samteit Development Inc. which was the name to which Norfinch Developments Limited had been changed following the break-up agreement. Samteit Corporation was formed in 1980 for the purpose of purchasing and dealing in land. It is apparent from the evidence that from the amalgamation of Samteit Developments Inc. and Samteit Investments Limited, at least, those two companies have been under common control or direction. As well, Mr. Teitelbaum was the sole shareholder of Samteit Corporation which is permitted to carry on business as Samteit Investments Limited and Samteit Development Inc. It is common ground that Mr. Teitelbaum was the controlling mind and guiding force of all the Samteit companies up until his death in 1981 and that they all have the same head office at 98 Norfinch Drive. From the point of Mr. Teitelbaum's death the Samteit group of companies has been in the hands of executors.

15. The Board is satisfied on this evidence that Norfinch Developments Limited and the three Samteit companies in question are under common control and direction and carry on associated or related activities or businesses within the meaning of section 1(4) of the Act.

16. While the criteria have been met for the issuance of a declaration under section 1(4) of the Act the question arises as to whether this is an appropriate situation for the Board to exercise its discretion to do so.

17. The circumstances of this case are unusual. When Mr. Ziering signed the Working Agreement on behalf of Norfinch Developments Limited, the company was actively engaged in construction. Following the signing of the Agreement it engaged in various other construction projects on which it honoured the Working Agreement. The evidence would indicated that at least by 1976 it was no longer actively engaged in construction work. Moreover, at present none of the Samteit companies is engaged in construction work. It is clear, however, that all three companies have corporate objects which are broad enough to encompass any aspect of construction work. At present these companies are in the hands of executors and their future direction is unclear. If they were to engage in construction work it would clearly be a situation for the exercise of the Board's discretion. If they don't then the Council will not need a declaration.

18. The parties are before the Board now. In the Board's view little purpose would be served by requiring the Council to seek the same declaration under section 1(4) of the Act at a later point in time, if and when one of the Samteit companies moves into construction. The declaration results in no appreciable prejudice to the Samteit companies. On the other hand to deny the declaration could bring prejudice to the Council through the delay which would accompany a further application to the Board at a time when any one of three Samteit companies may in fact be engaging in construction.

19. Accordingly, and for the reasons set out above, the Board declares that Norfinch Developments Limited, Samteit Developments Inc., Samteit Investments and Samteit Corporation are one employer for the purposes of the Act.

20. Further, for the reasons set out above, the Board cannot conclude that a sale of a business has taken place between Norfinch Developments Limited as the predecessor employer and any of the other Norfinch companies including Norfinch Construction (Toronto) Limited as the successor employer.

21. The Council's application under section 63 of the Act is therefore denied. Given the Board's disposition of the Council's application under section 63 of the Act it is unnecessary to consider the section 1(4) application as between the existing Norfinch Companies controlled by Mr. Ziering. The union has no bargaining rights for any of these companies. For these companies the link to bargaining rights was through an alleged sale of a business which the Board has concluded did not take place. The union's application under section 1(4) relating to the Samteit companies, however, is allowed with the accompanying declaration as set out above.